Solana Price Action: Insights and Impacts

Solana is an open-source blockchain founded in 2017 to host scalable, decentralized applications (dApps) powered by its native cryptocurrency, SOL. The Solana network was launched as an alternative blockchain with high throughput transactions and notably lower transaction fees to existing smart contract-enabled chains, such as Ethereum.

The Solana ecosystem has grown significantly over time and its SOL token ranks among the top ten cryptocurrencies by market capitalization as of the time of writing. Solana’s price has also had a noteworthy journey, especially after it soared by nearly 12,000% back in 2021. This growth helped to put the SOL token on the list of cryptocurrencies to watch out for and potentially invest in.

In this guide, we’ll explore the Solana price action by analyzing its price history, key events influencing its price, and how crypto market trends impact the SOL token price.

Before You Get Started

Before we explore Solana’s price action, remember that you can buy, send, receive, sell, and stake SOL using Trust Wallet.

Trust Wallet can be downloaded as a mobile app, or you can install the Trust Wallet Extension for your desktop browser.

Step 1: Get the most updated version of Trust Wallet

Below you’ll see the steps to create a new wallet, but you could just as easily import an existing Web3 wallet to Trust Wallet, if that’s your preference.

To create a new wallet:

• Download, install and then open Trust Wallet

• Choose “Create a new wallet”.

• Choose your backup option, or you can optionally postpone the backup process by choosing “Skip”.

• Start using Trust Wallet.

Step 2: Buy crypto using your Trust Wallet

• Select the “Buy” button, from the wallet’s Home screen.

• Choose Solana (SOL), and enter the amount you wish to purchase.

• Select the third party provider & payment method you’d like to use.

• Select “Buy SOL”, and then follow the steps to complete the purchase.

Analyzing Solana's Price History

Having only been live for three years, Solana’s price history has been relatively short but sweet. The SOL token was launched in March 2020. At the close of 2020, the Solana price surpassed the $1 mark, as the cryptocurrency and its blockchain garnered more attention from investors, and the crypto markets were buoyed by a rising Bitcoin price.

The following year, September 2021, marked one of the best periods for Solana so far. SOL’s price experienced a massive surge after it soared to an all-time high of $260. This price growth was fueled by the increasing adoption of Solana as a platform for non-fungible tokens (NFTs) and decentralized finance (DeFi) applications combined with the ongoing crypto bull market that pushed crypto asset prices to new highs.

However, by December of the same year, which marked the onset of the 2022 crypto bear market, SOL’s price began to decline. Like other cryptocurrencies, Solana’s value was affected by macroeconomic factors and idiosyncratic events in the crypto markets.

One such event was the FTX collapse in 2022, which saw the price of Solana experience a huge drop, which also impacted its trading volumes. So bad was the impact that the price of SOL dropped to lows of ~$10 in December of the same year, according to data on CoinMarketCap. As the crypto market started to recover in 2023 after the fallout of FTX, the SOL token began to increase in value again.

At the time of writing, Solana is currently trading at $87, according to data on CoinMarketCap. The price growth has been attributed to the crypto bull market that cryptocurrencies are currently reeling from.

Key Events Influencing Solana's Price

Solana’s price, just like that of other crypto assets, is influenced by events such as technological breakthroughs, crypto market rallies and crashes, and unexpected crypto-specific events.

At its core, Solana was created to be the fastest blockchain in the market, with the ability to process 50,000 transactions per second, thanks to its innovative consensus mechanism that blends Proof of Stake (PoS) and Proof of History (PoH). This has made Solana an interesting investment among blockchain believers.

Additionally, the Solana network has one of the most extensive and active NFT ecosystems, which has helped boost its growth and attract new users (who prefer it because of lower transaction fees and high transaction speeds) during the 2021 NFT hype.

Beyond technological breakthroughs, idiosyncratic crypto industry events also impact the price of Solana. This was evident with the FTX crash in late 2022.

FTX was a global centralized cryptocurrency exchange platform that went under due to mismanagement and misappropriation of funds. Sam Bankman-Fried, FTX’s founder, was later charged and convicted of a range of felonies, including fraud and money laundering.

While the collapse of FTX shook the crypto industry, Solana was greatly impacted as it was closely associated with Bankman-Fried. He was one of the biggest backers of Solana, such that skeptics argued that SOL’s price increase and any of its related assets from 2020 to 2021 were driven by the market advocacy of Bankman-Fried and his team.

Following the FTX crash, SOL’s price dipped to stay afloat at $10 before it began to self-correct. Although there are no clear reasons for SOL’s recent price uptick, we can highlight a few potential drivers.

To start, in October, Solana launched its GameShift suite, a platform that makes it easier for developers to build blockchain games. With this launch, SOL’s price started to rise. Another potential driver of SOL’s price was the launch of the BONK memecoin on the Solana network, which has skyrocketed in value and brought more attention and traders back to Solana.

Lastly, is the current ongoing crypto bull market that, among other things, is being driven by the much-anticipated, pending decision by the US SEC to approve a Bitcoin ETF.

Understanding Cryptocurrency Market Trends and Solana

Like other crypto assets, cryptocurrency market trends also impact Solana.

Supply and demand, crypto regulations, overall investor and crypto market sentiment, media coverage, geopolitical events, technological advancements, and competition within the crypto markets are the key market drivers of digital assets like Solana (SOL).

• Supply and demand are arguably the biggest drivers, as is the case for any asset. If there’s high demand for Solana, then the price goes up. And vice versa when demand drops. The supply of SOL is uncapped, so supply is less of a price driver in the case of Solana.

• Crypto regulations, or the lack thereof, are also a price driver, as talk of strict, crypto-unfriendly legislation or regulations can affect the entire digital asset market, pushing down the value of altcoins like SOL.

• Investor sentiment is another important factor that can affect the SOL token. If investors feel optimistic about a token, trading volumes and the price will reflect this. However, if they are bearish about it, the price will be affected negatively.

• Crypto market crashes caused by crypto-specific events like the FTX debacle can result in the value of all crypto assets, such as Solana, declining significantly. This was what happened when FTX collapsed, and Solana’s price collapsed.

The value of crypto assets is also susceptible to market changes caused by geopolitical events or technological innovation. Political unrest and war can drive investors towards decentralized, censorship-resistant assets like Bitcoin and stablecoins, for example.

Moreover, new technological innovations, such as the launch of new tokens like NFTs, can also greatly affect the value of the token involved in such a growing ecosystem. We saw that with Solana during the NFT boom when many NFT platforms added Solana network support due to its low fees and high transaction speeds.

Competition from peers also affects the value of a crypto token. In the case of Solana, other smart contract-enabled, high throughput layer-1 chains that manage to attract more developers, users, and funding pose a threat, which could affect the value of its token if other chains outperform Solana.

Conclusion: Navigating Solana's Price Landscape

Solana has been around for about three years, and its price is arguably still in the discovery phase. While its price has had a relatively positive outcome so far, we can only speculate on what SOL’s price will look like in a few years.

However, what we do know for certain is that there will always be various factors that will influence the price of SOL. These factors include investor sentiments, market sentiments, media coverage, technological innovations, and regulatory developments, among others. As such, if you are an investor looking to invest in SOL, you must do your own research (DYOR) before deciding to make a purchase.

Moreover, make sure that you stay informed of the latest market events and trends happening in the Solana space and how these changes can affect your SOL holding. Remember, you can transfer SOL from Phantom to Trust Wallet and manage all your Solana tokens under one roof.

Download Trust Wallet today to securely manage your SOL tokens.

Join the Trust Wallet community on Telegram Follow us on X (formerly Twitter) Instagram Facebook Reddit

Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.